On 21 April 2021, the venus pool on Belt Finance experienced several complications that affected the withdrawal and compounding of assets in that pool. Only assets in the Venus pool were affected. While we continued to give benefits to our users, a portion of this started to go to the Venus treasury because of the implementation of Venus’ VIP-12 on April 20, 8:20pm GMT+8.
First of all, we would like to sincerely apologise for the craziness and lack of swift communication of the events that took place yesterday. The experience of our users was not the best and as a project that prides itself in transparency, we are sorry that we could not communicate the issues in real time and give more assurance to our users. We wish to re-emphasise that Belt.fi’s security and protecting user assets is our top priority, and on this issue, we are talking with the Venus Protocol team so that our users can be compensated.
Venus implemented the VIP-12 proposal in which they introduced VAI liquidation, VAI mint fee and a redemption fee increase to 0.01% of vTokens. In short, the new Venus implementation would cause transfer of 0.01% on the redeem process. A small amount (0.01%) of each users’ deposited amount was transferred when withdrawals were executed.
Although steps were taken to prepare for this event with the launch of the v2 pool and vaults, we were unable to fully deal with this fee in our venus pool. Withdrawals when VIP-12 was launched racked up a considerable amount of fees from the venus pool that went directly to the Venus Protocol Treasury.
The new 4Belt pool also started facing issues with Venus protocol not because of the VIP-12 update but due to the extremely high utilization of Venus Protocol’s asset lending.
Belt.fi venus pool issues
As we explained above, with the new Venus redeem fee, there was a 0.01% redeem fee that was incurred with withdrawals. This extra fee went to the Venus Protocol Treasury.
4Belt pool issues
Due to the high utilization rate on Venus, when withdrawals were requested and were redeemed on Venus, an error code was returned and not the transaction was not reverted. We did not have an exception code for this error so the process would go through and the LP was burned (not the underlying assets). Some users faced a situation where they successfully “withdrew” their LP but their assets did not get withdrawn and returned to them. The underlying assets are SAFU. Only the LP is burned and their underlying assets remain safely in vaults. These assets will be returned to their rightful owners.
- We have inactivated the Venus strategy on our 4Belt pool, vault, and single withdrawals.
- We have updated the code to respond to the changes in Venus. These will be queued to a Timelock contract at 10:00 UTC today and will be executed after 24 hours.
- We have implemented a Timelock on the current code for the contract upgrade for users and protocol safety and paused withdrawals until the new update is live.
In response to users that incurred losses:
- Belt Finance will make it possible for the users that faced (LP Burned) losses to claim their funds with a new update that will be launched as soon as possible. We will do this through providing a cover contract or transfer and claim system from the pool. This is because with the LP burn situation, the LP was burned but the assets were not withdrawn. The assets remain in the contract and are SAFU. We are working on this system right now.
- For the losses to the pool through the withdrawals, Belt Finance is talking with the Venus protocol to find ways to cover these losses that went to their treasury.
When we created the venus pool on Belt.fi, we made it so that we did not have the option of vault migration. This was because we thought the Venus Protocol to be the most stable, best choice as the largest lending protocol in BSC and their first pool would only be utilizing Venus and no other protocol. This, however, became a problem in making swift responses to events like yesterdays.
In our v2, all the vaults we use have migration functions. We did this thinking of possible events like yesterdays so that user risk is spread out and we don’t rely solely on one protocol. With our multi-strategy yield system using multiple strategies, we are much less impacted when one faces issues. As such, we have made the Venus protocol an inactive strategy in all our vaults right now.
We are currently still in discussion with the Venus team on how to move forward so that users who had deposits in our pools and experienced a loss of funds due to the change in redemption fee structure by Venus Protocol in their recent VIP-12 proposal implementation can have their losses covered.
We are also enacting some other changes:
- We will upgrade the contract to prevent any potential issues similar to this one.
- As mentioned above, we are setting up a system to trace all the users who faced losses when withdrawing from the 4Belt pool and their corresponding losses.
- We will increase the number of moderators to have better coverage in different time zones and wholly improve our user support as is required.
- We will work and communicate more closely with other BSC DeFi projects in an alliance to contribute to a thriving BSC ecosystem and community.
We appreciate your understanding on this matter and greatly thank you for your continued support for Belt Finance!
Belt Finance April 21 Incident Report: Venus Issue was originally published in Belt Finance on Medium, where people are continuing the conversation by highlighting and responding to this story.